Pension reform committee issues recommendations

SAN DIEGO - A final Pension Reform Committee report the mayor
released Wednesday recommends 17 steps to help fix the city of San
Diego's ailing retirement system.

The nine-member committee was appointed by Mayor Dick Murphy in
2003 to scrutinize the San Diego City Employees Retirement System.
It now faces a $1.15 billion deficit and $545 million in unfunded
retiree health care costs.

"We have arrived at a series of recommendations that deal with
paying off that debt," said April Boling, who chairs the panel.

Among the recommendations, the committee called on the city
to:

Infuse $600 million into the plan over the next three fiscal
years, with no less than $200 million paid in during fiscal year
2005.

Amend the City Charter to require a 15-year amortization period
beginning in fiscal year 2008.

Raise the retirement age by seven years and set the early
retirement age at five years less than the normal retirement
age.

Change the way pension benefits are calculated.

Eliminate specific programs related to deferred retirement and
the purchase of years of service credits.

Establish a separate trust or accounting to take into
consideration the assets and liabilities of the retiree medical
benefit plan.

Change the composition of the Retirement Board to seven members
appointed by the City Council who are not city employees, union
representatives or participants in the pension system.

Establish a committee to review the entire disability
retirement system.

Require a report from SDCERS on the issue of an
employer/employee cost splitting program by the end of the
year.

Investment performance, under-funding by the city, the use of
plan earnings for contingent benefits, net actuarial losses and
benefit improvements contributed to the poor condition of the
pension system, the report said.

Boling said that at least $259 million needs to be put into the
retirement system each year to keep from going backward.

The city put $130 million into the system this year.

"This recommendation is a roadmap to solving the problem,"
Murphy said. "The city can and will solve the unfunded liability in
its pension system."

Four of the recommendations in the Pension Reform Committee
report have, in part, already been advanced, Murphy said.

In July, the City Council initiated a plan to issue at least
$200 million in pension obligation bonds this fiscal year.

The panel also agreed to place two ballot measures before voters
on Nov. 2 that would restructure the way the $3.2 billion
retirement system is managed.

The first would change the makeup of the Retirement Board. It
does not decrease the number of board members or exclude all city
employees and retirees from serving as recommended in the
report.

Nine of the 13 trustees now on the board are active or retired
city employees, which some people argue promotes a public
perception of a conflict of interest.

The second ballot measure would require the retirement board to
adopt amortization schedules similar to those recommended in the
report.

The Pension Reform Committee's recommendations are scheduled to
go before the City Council on Tuesday.